Wednesday, August 21, 2019

Fool's Gold Accounting at City Hall


There are two accepted financial accounting standards.  FASB (Financial Accounting Standards Board) is the gold standard used by private businesses that requires truthful reporting of liabilities.  The other is GASB (Governmental Accounting Standards Board), used by state and local governments.  It does not impose accrual accounting and permits aggressive assumptions for valuing pension obligations.


Under GASB, cities may report balanced budgets and surpluses that are neither.  It treats loans as revenue, avoids cost recognition by not paying expenses, and reports less debt than is actually owed. 


https://citywatchla.com/index.php/2016-01-01-13-17-00/los-angeles/18276-it-s-time-for-truth-in-state-and-local-government-finances

GASB accounting is the method used by Encinitas:


Jody Hubbard is a CPA.  Why does she stay silent when the Mayor touts the city’s great financial health?  Is she ignorant about governmental accounting standards?

15 comments:

  1. Guaranteed Blakespear could not understand this info if her life depended on it.

    Hubbard's too afraid to rock the boat especially given Blakespear's habit of lashing out at anyone who questions the status quo. So much for having a financial person on the dais.

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  2. Lou, who are you? You are embarrassing yourself.

    Cities don’t get to choose their own accounting standards. By law (sec 30200), cities must use accounting standards defined at the state level. There’s a 500+ page manual that has to be followed, and it is based on GASB.

    If you don’t like GASB, then go work to change state law. But don’t drag the city for doing what they are legally required to do.

    https://www.sco.ca.gov/Files-ARD-Local/ASP_Manual.pdf

    WHO IS LOU? What is/are his background and motives?

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    1. Who are you? A city troll? GASB is the minimum standard. Any governmental entity could choose a higher standard. Of course they won't. Lobbyists in the state legislature have assured that cities can play fast and loose in order to hide their true long-term indebtedness. There's a huge pension crisis looming that may cause bankruptcies if cities keep hiding their true debt.

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    2. Oh, I see. So accounting standards are hierarchical, right? Which is “higher” (your word): FASB or IFRS?

      Who ever you are, Lou, you are embarrassing yourself.

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    3. You sound a little too freaked out, 4:19/6:52. I'd say you're the one embarrassing yourself.

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  3. Encinitas sinks deeper into debt with the outrageous pensions paid to these "civil servants". More like the entitled parasites. Pension reform is way overdue and will ONLY come thru a voter initiative.

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  4. The article's author is George Schultz, which should be a familiar name: "a former U.S. secretary of state, labor and Treasury; a distinguished fellow at Stanford University’s Hoover Institution."

    Yet somehow the troll above claims to know more than Schultz, who btw at no point refers to any laws forcing lax accounting rules on cities. 5:30 has it exactly right.

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    1. So you think cities get to pick and choose their accounting standards?

      Sounds great. What could go wrong?

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    2. Cities can hold themselves to accounting standards that don't count borrowing money as income, repeatedly spreading the lie to trusting residents that "finances are in fine shape," and continuing to spend to the skies on trophy projects no one wants.

      What could go right?

      What department are you with?

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    3. Isn't that what Detroit and Compton did prior to their financial melt downs?

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  5. Jody Hubbard is an idiot! Have you heard her talk? She doesn't make any sense. She just rambles about nothing. She would make a good Jerry Steinfield espisode.

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  6. Dunno but he lives in Loucadia.

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  7. the poster asking "Lou, who are you" is the wife of the fire chief

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